Senate forum sheds light on natural gas exports

Energy analysts will be reading the tea leaves Tuesday as Obama administration officials field questions about their approach to exporting U.S natural gas during a Senate forum on the issue.

The Senate Energy and Natural Resource Committee’s roundtable comes just days after the Obama administration granted a second company the authority to broadly export the fossil fuel.

The forum — the second in a three-part series focused on natural gas — includes experts from think tanks, representatives from the chemical sector, economists and Energy Department officials.

“You don’t often see representatives from natural gas drilling companies and chemical producers and conservation groups sit down at the same table in a public forum, but that’s exactly what we’re doing with these roundtables,” said committee chairman Ron Wyden, D-Ore.

Related story: Senators grapple with free trade questions surrounding natural gas exports

The first forum examined how current infrastructure must be upgraded to expand use of the fossil fuel to power cars and meet other needs. A roundtable scheduled for Thursday is set to look at environmental concerns surrounding natural gas drilling, including the hydraulic fracturing technology that has helped unlock supplies in dense rock formations across the U.S.

Tuesday’s session, however, is attracting heavy interest because Acting Assistant Energy Secretary Christopher Smith is set to field questions about how the Energy Department is vetting applications for licenses to export natural gas to countries that do not have free trade agreements with the United States.

Previously, Smith has stressed that in reviewing the export applications, regulators were considering a wide array of factors, including trade, jobs, energy security, environmental issues, the effects on price and the impact on businesses that heavily use the fossil fuel.

A federal law dictates that the Energy Department must affirm proposed exports are in the public interest before granting licenses to sell the fossil fuel to countries that don’t have free-trade agreements with the United States — a benchmark that tilts in favor of the foreign sales.

In granting Freeport LNG an export license on Friday, the Energy Department signaled it would stick with that approach for vetting the applications and affirmed that the Obama administration views at least a limited amount of exports as in the public interest. In its Freeport LNG order, the Energy Department also made clear that it believes environmental concerns surrounding natural gas development are best handled during the Federal Energy Regulatory Commission’s review of proposed export facilities.

Some big natural gas users argue that unfettered exports could cause U.S. prices to rise and blunt their competitive advantage in transforming the fossil fuel into other products for sale overseas. Meanwhile, some producers are lobbying hard for the right to sell the fossil fuel to Asian markers hungry for a new power source; they argue that any cost increases will be modest and just sustain current drilling.

“Our country should not be wedded to this either-or choice, with no exports and no limits on exports,” Wyden said. “Done right, there ought to be a way to get the trade benefits…(while retaining) the economic and energy security benefits to our country.”

Both the Energy Department and the Federal Energy Regulatory Commission have roles vetting proposed LNG export facilities. So far, Energy Department officials have said they will take a first-come, first-served approach to navigating the 19 remaining applications to export some 25 billion cubic feet per day of natural gas to countries that don’t have free-trade agreements with the United States. But some of those proposals are closer to construction than others, and some energy companies have pushed the government to first consider export applications for facilities with stronger financing and more complete filings before FERC.

Participants in Tuesday’s forum include:

  • Department of Energy – Christopher Smith, Acting Assistant Secretary, Office of Fossil Energy
  • Energy Information Administration – Adam Sieminski, Administrator
  • American Chemistry Council – Cal Dooley, President/CEO
  • Cheniere Energy, Inc.– Pat Outtrim, Vice President of Governmental and Regulatory Affairs
  • Dr. Charles Ebinger – The Brookings Institution – Director, Energy Security Initiative, Foreign Policy
  • Energy Policy Forum – Deborah Rogers, Founder
  • ICF International – Harry Vidas, Vice President
  • Industrial Energy Consumers of America – Paul Cicio, President
  • The Oregon State Building and Construction Trades Council– John Mohlis, Executive Secretary
  • Sempra Energy – Octavio Simoes, Senior Vice President of Sempra International/President of Sempra LNG